Let’s get real about interest rates

Yes, the Federal Reserve on Wednesday raised the key federal funds rate (by 0.25 percent).

Yes, it’s the second rate hike since last December.

However, the federal funds rate still is below 1 percent after hovering near zero since late 2008. And while higher rates will affect consumer loans such as student loans, car loans and home mortgages, the Fed repeatedly has said that future increases will be “gradual.”

The Fed “sees the potential for a modest uptick in prices and activity over the next 12-24 months,” Lindsey Piegza, chief economist at Stifel Fixed Income, said in a statement. “But in the long-run, the Fed’s forecast for a moderate (read: blah) trajectory of the economy remains.”

Much of what I wrote in this article for The Dallas Morning News a year ago on how higher rates might affect consumers still holds true today.

Interest rates generally are still low.

Look at the 30-year mortgage rate. It peaked at 18.5 percent in October 1981. Today, it’s 4.16 percent vs. just under 4 percent a year ago.